Don't Trip Yourself up While Buying a Home
With the thrill that comes with an accepted offer and a "yes" from the lender, some homebuyers make the mistake of carrying their enthusiasm straight to the mall or appliance store. There still remain a few major hurdles to jump before the keys are handed over. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't throw your money around. You may be itching to turn your new living room into a home magazine cover, or celebrate your new dream home, but keep away from big purchases like furniture, cars, appliances, or vacations until closing. Your lender may send up red flags if you finance your electronics on your credit cards in the middle of your loan process. Because lenders are reviewing your bank accounts, a large cash purchase is also a bad idea.
Don't get a new career. Lenders like to see a consistent job history on your paperwork. Getting a new career before you start the application process for a mortgage loan may not compromise your approval at all. However, getting a new job during your approval process might influence your approval.
Don't switch banks or move finances around in your bank accounts. While your lending institution considers your mortgage loan package, you will likely be instructed to produce bank statements for the last two or three months on your checking and savings accounts, money market accounts and other liquid wealth. To eliminate fraud, lenders require clear documentation of how you earn your living and where any additional wealth comes from. No matter the reason, switching banks or transferring money could raise a red flag with the lender and slow down your qualification process.
Don't give cash directly to your seller (generally in the case of of "for sale by owner") for earnest money. Until the sale is complete, the earnest money actually belongs to you. A FSBO seller might not realize that the good faith money must go toward your expenses upon closing. Get an attorney or other neutral person who will hang on to the money or place it in a trust account until closing. Your contract should specify where the deposit goes if the transaction fails.